Philippines Agribusiness Report Q2 2018
We hold a broadly positive view on the Philippines' agribusiness sector in the long term, given the country's potential forexpansion into new sectors, such as palm oil. The trend towards revising our forecasts upwards in this update – for cornconsumption, rice production, sugar production, and butter consumption – is supportive of this view. We particularly like theoutlook for sugar mills and believe the livestock sector will continue to show healthy growth rates. The Philippines' vastconsumption market along with strengthening government support, will foster domestic and foreign investment and favour outputexpansion. However, backyard farming and infrastructure problems, especially transport costs, will continue to hamper the sector'sgrowth. These inefficiencies will become increasingly crippling as South East Asia moves towards the ASEAN Economic Community,which is supposed to lead to trade and investment liberalisation across the region. Although the Philippines' government appears tohave taken the measure of the challenge and is now supporting rice and sugar production, agriculture in the country remainsuncompetitive. As such, the sector is at risk of low-cost imports from its neighbours over the medium term.
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